Middle-Class Areas Shrink as Income Gap Grows, New Report Finds

The portion of American families living in middle-income neighborhoods has declined significantly since 1970, according to a new study, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent.

“The middle class really means you are beginning to have more disposable income, not living at a subsistence level. If you think about what drives our current economy, its people’s ability to buy goods and services in the marketplace. With the loss of disposable income which comes with a declining middle class, you have begun to put kinks in the economic engine we all rely on.”

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

Here are the statistics to prove it:

83 percent of all U.S. stocks are in the hands of 1 percent of the people.

61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.

36 percent of Americans say that they don’t contribute anything to retirement savings.

A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

24 percent of American workers say that they have postponed their planned retirement age in the past year.

Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970.

Arguably, the most important economic trend in the United States over the past couple of generations has been the ever more distinct sorting of Americans into winners and losers, and the slow hollowing-out of the middle class. Median incomes declined outright from 1999 to 2009. For most of the aught, that trend was masked by the housing bubble, which allowed working-class and middle-class families to raise their standard of living despite income stagnation or downward job mobility. But that fig leaf has since blown away. And the recession has pressed hard on the broad center of American society.

In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.

The top 1 percent of U.S. households owns nearly twice as much of America’s corporate wealth as they did just 15 years ago.

In America today, the average time needed to find a job has risen to a record 35.2 weeks.

More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.

Or the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.

Approximately 21 percent of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.

And the gap between rich and poor in college completion — one of the single most important predictors of economic success — has grown by more than 50 percent since the 1990s, said Martha J. Bailey, an economist at the University of Michigan. More than half of children from high-income families finish college, up from about a third 20 years ago. Fewer than 10 percent of low-income children finish, up from 5 percent.

The truth is that the middle class in America is dying — and once it is gone it will be incredibly difficult to rebuild.